Ryanair, Europe's largest budget airline, has revised its fiscal year 2027 traffic target downwards to 214 million passengers from an initial 216 million. This decision stems from the need to reduce its exposure to increasing unhedged jet fuel costs, particularly during the traditionally loss-making winter season (November to March). The airline anticipates that this reduction in winter capacity will mitigate seasonal losses by approximately €70 million to €100 million ($81 million to $116 million).
The airline has effectively hedged 80% of its fiscal year 2027 fuel requirements at an average price of around $67 per barrel. However, current unhedged jet fuel prices in Europe are significantly higher, trading near $163 per barrel, with the global average reported at $171.01 per barrel last week. CEO Michael O'Leary warned that sustained high oil prices could pose a survival challenge for less-hedged rivals, potentially leading to widespread capacity cuts across the European aviation sector. He noted that if jet fuel prices remain around $149 per barrel, very significant capacity cuts would occur across Europe's winter fleet.
Despite the adjusted target, Ryanair projects another profitable year, though profit after tax is expected to fall below the record level of fiscal year 2026. The airline also indicated that short-haul airfares in Europe are likely to increase materially if high oil prices persist into 2027, as competitors pass on higher fuel costs. Ryanair's August traffic saw a 6% increase to 22.2 million passengers, maintaining a 96% load factor, and summer traffic is still on track to increase over 5% to 145 million passengers. The airline is strategically positioning itself for future cost advantages through new aircraft deliveries and expanded in-house maintenance.
